SCOTUS decision could have legal departments squeezing more out their label review practices

POM Wonderful LLC’ s Lanham Act claim against Coca-Cola Inc. argues that Coke misled consumers on the contents of one of its Minute Made drinks. While a decision in POM’s favor could mean penalties for Coke, the outcome of that case could have also have wide-ranging implications on how and when companies are vulnerable legal action against the way they label products.

While the Lanham Act was set up primarily to protect companies from copyright and trademark infringement, special stipulation within it allows for lawsuits between competitors in the event of unfair commerce practices. “It provides for the protection and registration of trademarks, however it also has an unfair competition provision that also provides a course of action regarding false and misleading advertising,” says Thomas Williams, a partner at Ulmer & Berne LLP, and the author of the book, False Advertising and the Lanham Act.

In the case at hand, POM asserts that Coke’s Minute Maid Pomegranate Blueberry carried an intentionally misleading name because the juice blend contained only 0.3 percent pomegranate and 0.2 percent blueberry juice. The rest comprised apple and grape juice. However, Coke says that its labeling was in compliance with Food and Drug Administration (FDA) regulations, and therefore should be protected from Lanham Act claims as a result.

“The big question here is: Is a Lanham Act claim barred because the FDA has spoken to this issue and ruled that the label is admissible?” Williams says. “The FDA may not have expressly examined this label but they have issues a set of regulations and rules, and the label appears to comply with those rules.”

Should POM squeeze a win out of the Supreme Court the ramifications for in-house counsel could be substantial, requiring them to make a major overhauls to labeling review practices.

“It’s going to throw your clearance process into disarray and potentially cause a lot of uncertainty, you’ll no longer be able to look at the FDA rules and regulations and say, ‘this label is compliant with FDA regulation so we can use it,’ you’ll instead have to conduct another layer of analysis, asking, ‘is this label false or is it misleading?’ that’s not always an easy questions to answer,” Williams says

Williams also says that the result of a decision in POM’s favor could also lead to an increase in the amount of Lanham act claims and litigation companies see from competitors. “If the Court overrules the 9th Circuit decisions it could lead to a flood of competitor litigation in food and beverage labeling claims. I suspect that there have been a lot of competitors sitting on the sidelines wishing that they had a challenge available and deciding not to proceed because a label they wanted to challenge complied with FDA regulations.”

Oral arguments for this case began on April 22, and though a decision is not expected until later this year, Coke has already faced tough questions from Supreme Court Justices. During opening arguments POM indicated it felt that FDA regulations should be a floor not a ceiling when it comes to what’s actionable relating to labeling claims.

Food and manufacturing companies will want to keep an eye on the case, as it could potentially require significant overhaul to label review practices.

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